DHR International Inc v Challis (No 4)

[2016] NSWSC 610

Supreme Court

New South Wales

Medium Neutral Citation:	DHR International Inc v Challis (No 4) [2016] NSWSC 610
Hearing dates:	9 May 2016
Date of orders:	12 May 2016
Decision date:	12 May 2016
Jurisdiction:	Common Law
Before:	Adamson J
Decision:	See paragraph 34
Catchwords:	PROCEDURE – application to set aside subpoena – subpoena complied with and documents are available – plaintiff has legitimate forensic purpose in the documents covered by the subpoena – issue of whether defendant posted comments on his blog personally – relevant to malice in context of injurious falsehood – concerns about confidentiality do not provide basis to set aside a subpoena – application dismissed
Legislation Cited:	Competition and Consumer Act 2010 (Cth), Schedule 2, ss 18, 236 Telecommunications and Interception Act 1979 (Cth),
Cases Cited:	Harman v Secretary of State for the Home Department [1983] 1 AC 280
Category:	Procedural and other rulings
Parties:	DHR international, Inc (Plaintiff) David challis (Defendant)
Representation:	Counsel: RC Gration (Plaintiff) D Sibtain/ P Horobin (Defendant)   Solicitors: K & L Gates (Plaintiff) Atanaskovic Hartnell (Defendant)
File Number(s):	2015/305715

Judgment

Introduction

1. The plaintiff, DHR International Inc., claims injunctions and damages against Darren Challis, the defendant, on the basis of the tort of injurious falsehood and damages pursuant s 236 of Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law) for misleading or deceptive conduct in trade or commerce in contravention of s 18 of the Australian Consumer Law. The plaintiff’s claim arises from the defendant’s posting of a blog in which he published representations and comments which denigrate the plaintiff and its business practices (the Blog).

2. By statement of claim filed on 13 November 2015 the plaintiff alleges, relevantly:

[27]   Since on or about 14 December 2014, the defendant has published various statements at the Blogs URLs that are false and/or that give rise to false imputations regarding the plaintiff and/or the plaintiff’s business (False Blog Statements).

[28]   The defendant published the False Blog Statements maliciously.

3. By notice of motion filed on 14 April 2016, the defendant seeks to set aside a subpoena issued at the request of the plaintiff to Telstra Corporation Limited (Telstra) on 2 March 2016.

4. The schedule to the subpoena relevantly seeks the following documents:

“The documents or things you must produce are as follows:

1.   A Document (or Documents if the information sought is not recorded in a single document) recording the customer account information, including:

(a)   the name of the account holder;

(b)   the name of any account contact person;

(c)   the name of any person authorised to access information about the account or make changes to the account;

(d)   the billing address of the account holder;

(e)   the telephone number of the account holder;

(f)   the email address of the account holder; and

(g)   the address of the location where the service is supplied,

for the account that was allocated IP address 121.209.225.60 as at 7 October 2015 at 08:52 UTC (‘Relevant IP Address’).

…

3.   If the Relevant IP Address a dynamically allocated IP address, a Document (or Documents if the information sought is not recorded in a single Document) recording the following information for the period 12 December 2014 to the present date in respect of all communications with the service that was allocated to the Relevant IP Address as at 7 October 2015 at 08:52 UTC at the time each respective communication was made:

(a)   the IP address that had been allocated to the service at the time of the communication;

(b)   the identifiers of any device from which communications have been sent;

(c)   the identifiers of the account, telecommunications device or relevant service to which communications have been sent;

(d)   the date and time of the start and end of the communication;

(e)   the type of communication (HTTP, email, etc); and

(f)   the location of the equipment or line at the start and end of the communication.”

5. Telstra has produced a CD-ROM disc in answer to the subpoena. The defendant has moved to set aside the subpoena on the grounds that it amounts to a fishing expedition and has no identifiable legitimate forensic purpose.

The factual background

6. The Blog is entitled “Unofficial DHR International Litigation Monitor”. It contains an article with the headline “The many audacious lies in David Hoffmann’s resume”. Various “comments” have been posted under the heading “reply”, including the following “anonymous” reply posted on 5 March 2015 at 12.17am:

“This is not just embarrassing for DHR International, it goes to ethics. How can someone be all over the press telling people they need to be honest and at the same time being highly inaccurate on their own website. It is incredible!”

The evidence

The technology associated with the record-keeping of Telstra

7. The defendant adduced evidence from Shane Bell, an expert in computer forensics. Mr Bell prepared a report dated 14 April 2016 in connection with this proceeding, which was annexed to his affidavit affirmed 20 April 2016. The following summary is largely derived from his evidence (including his cross-examination), which was not, ultimately, controversial.

8. Each Internet Service Provider (ISP), including Telstra, has a block of Internet Protocol (IP) addresses which it allocates to its account holders to permit them to connect devices (such as desktop and laptop computers, mobile phones and tablets) to the Internet either through a modem (in the case of a fixed connection) or a router (in the case of Wi-Fi). IP addresses are administered globally in regions.

9. IP addresses are either static or dynamic. If an account holder has a static IP address, it does not change. However, if an account holder has a dynamic account, then the IP address can, and does, change. For example, if a modem or router reboots, when it comes back on-line Telstra assigns a new IP address from its available block of IP addresses. The new IP address is then associated with the modem or router, until any reassignment occurs.

10. A person who purchases an Internet connection from an ISP is provided with an IP address associated with the router or modem from which a home or business network can be configured (with user names, passwords, and the like) so as to permit several devices to be connected to the Internet through the same IP address.

11. A user can identify the IP address from the device which is connected to the Internet, although users, particularly those with a dynamic IP address, would commonly have no reason to check that information. The ISP can identify a service with a dynamic IP address by reference to the identity of its IP address at a particular time. Once that identification is made, the ISP can locate (and provide in answer to a subpoena, as Telstra has done in the present case) records of all connections between that IP service (and corresponding IP addresses allocated from time to time by reason of its dynamic nature) and various Internet websites.

12. The records (known as metadata) kept by the ISP do not differentiate between the devices used by the particular modem or router associated with the IP service. Thus, for example, it is not possible to tell, from a record of a connection at a particular time between an IP address and a particular website, which device linked to the modem or router was responsible for the connection. Accordingly, where a number of people use the same modem or router to connect to the Internet (as commonly occurs within businesses or households), more is required to associate a connection to a website with a particular user than the metadata kept by the ISP.

13. An amendment to the Telecommunications and Interception Act 1979 (Cth), which came into force on 13 October 2015, requires ISPs to retain, in respect of a communication (connection to the Internet), records of the identifiers of a related account, service or device from which the communication has been sent or forwarded by means of the relevant service. The content of the pages of the websites viewed is not, however, recorded.

The association between IP address 121.209.225.60 and the defendant

14. When Mr Bell was retained to prepare his report, he was asked to assume that the IP address 121.209.225.60 was associated with the private use of a residential Telstra Big Pond service at the home where the defendant resides with his family at Rose Bay in Sydney. He made no independent inquiry to verify the assumption. He was also asked to assume that the IP address assigned by Telstra to the Big Pond service was dynamic and took no steps to verify that matter.

Documents discovered by the defendant

15. The defendant has provided limited discovery pursuant to an order I made on 18 December 2015. I accept Mr Bell’s evidence that none of these documents establish a connection between the Telstra Big Pond service at the defendant’s home and the IP address 121.209.225.60. Although a document was in evidence that recorded that someone had interrogated a device to ascertain the IP address at that point in time and had discovered that the IP address was 121.209.225.60, the document did not link the search to the defendant’s home. Indeed, it indicated that the relevant postcode was 2000 (being the postcode for the city of Sydney) which is not the postcode for Rose Bay, being the suburb where the defendant resides with his family.

16. In these circumstances, I do not accept the evidence (which was, in effect, a submission) of Michael Sophocles (the defendant’s solicitor) that the material sought in paragraph 1 of the schedule to the subpoena has “effectively” been provided on discovery by the defendant.

The defendant’s position

17. In his affidavit affirmed on 25 November 2015, the defendant deposed that he was the director of Challis & Company Pty Ltd, trading as Amrop Challis & Company. Accordingly, the defendant is, potentially, the human agent through which his company acts.

The parties’ submissions

The defendant’s/ applicant’s submissions

18. Mr Sibtain, who appeared on behalf of the defendant/applicant, contended that the information likely to be produced in answer the subpoena would be of no forensic utility to the plaintiff. He submitted that the plaintiff was seeking to use the documents obtained on subpoena to establish that the defendant used a device at his home (such as a laptop) which belonged to Challis & Company Pty Ltd trading as Amrop Challis & Company, which meant that the publication of the matter complained of from that device was a publication in respect of which he was an accessory. He contended (on the basis of the technology summarised above) that such information would not be revealed by what was produced in answer to the subpoena, which, accordingly, ought be set aside.

19. Mr Sibtain submitted that the effect of Mr Bell’s evidence was that the documents produced by Telstra would not reveal from what device any particular connection had been made. He contended, in summary:

The only legitimate forensic purpose would be if they were able to determine, from the Telstra subpoenas, that a particular device owned by Challis & Company was used.

20. Mr Sibtain also submitted that, in circumstances where the defendant has admitted publication of the Blog, the outstanding issue is whether the conduct engaged in took place in trade or commerce and that the material produced in answer to the subpoena would not be germane to that issue.

21. Further, Mr Sibtain contended that there was no reason why the material produced ought cover any data after 7 October 2015, that being the relevant date in the statement of claim.

The plaintiff’s/ respondent’s submissions

22. Mr Gration, who appeared on behalf of the plaintiff/ respondent, relied on the circumstance that the defendant has only ever admitted (at least in court) to the establishment or publication of the Blog. He has not admitted to being its author for the purposes of these proceedings, although he made the following qualified admission in a letter dated 11 November 2015 to Mr Jose Leyun, the Chief Executive Officer and Chairman of The Amrop Partnership SCRL:

“I agree that it is important that we are open and, accordingly, I confirm that I established the blog and have written much – but not all – of the material on the blog.”

23. Mr Gration contended that the plaintiff has a legitimate forensic purpose in knowing whether the so-called “anonymous” comments posted on the Blog were written and published by the defendant himself. This issue is germane to the question of malice (which is relevant to the tort of injurious falsehood), as well as the identification of other statements on the Blog which might be linked to the defendant personally. He submitted that the documents produced by Telstra in answer to the subpoena would assist in establishing whether or not that was so, since, if they showed that the IP address associated with the defendant connected with the Blog website at the same time as the comments were recorded as having been posted, this would provide a basis for the inference that it was the defendant who posted the comment.

24. Mr Gration referred to the correspondence attached to Mr Sophocles affidavit concerning what occurred after 18 December 2015 (when I ordered that the defendant give discovery of limited categories of documents and produce certain hard drives to the Court within fourteen days of the date of the order). The defendant’s computer became water-damaged between the date of my order and the date on the hard drives were required to be produced, as a result of which the hard drives produced could not be read. He submitted that the effect of the water damage meant that the plaintiff had to resort to other means (such as the issue of the subpoena to Telstra) to ascertain at what time the Blog was accessed, for the purpose of identifying whether the defendant made the anonymous comments.

25. Mr Gration submitted that the period covered by the subpoena ought not be limited to the period up to 7 October 2015 since the plaintiff was entitled to investigate what occurred with respect to the Blog after that date.

The defendant’s/ applicant’s submissions in reply

26. Mr Sibtain contended that, even if I were satisfied that the subpoenaed material would assist the plaintiff’s case on malice, I could not be satisfied that such assistance would be material.

Consideration

The relevance of the documents sought to the issues in the proceedings

27. I am satisfied, on the basis of Mr Gration’s submissions set out above, that the plaintiff has a legitimate forensic purpose in obtaining access to the documents covered by the subpoena. The effect of the evidence regarding the technology referred to above is that it is not feasible for the plaintiff to seek, on subpoena to Telstra, the connections made by the defendant himself, since such a distinction is not drawn in the metadata. All that can be required to be produced is a list of connections between a particular IP service (which may have a number of users) and particular websites over a defined period.

28. I am not persuaded that the period ought be limited to the date for which Mr Sibtain contended. Whether the documents produced will “materially” assist the plaintiff’s allegation of malice remains to be determined and does not amount to a basis for setting aside the subpoena. The documents produced on subpoena will at least permit the comparison to be made between the times at which the “comments” were posted on the Blog and the times at which the IP address associated with the defendant made a connection with the website containing the Blog, to ascertain whether there is any correlation.

Potential invasion of privacy

29. It is possible that the privacy of persons unconnected with the litigation will be invaded if persons other than the defendant use the particular IP service. However, the evidence does not permit me to infer that any other persons use the service since there is no evidence that establishes that it is associated with the Telstra Big Pond account that provides a connection to the Internet at the defendant’s home in Rose Bay.

30. Litigation almost necessarily causes invasions of privacy, which are thought, generally, to be sufficiently protected by the constraints that operate on the use of material produced pursuant to the court’s compulsory processes. An inspection of documents produced on subpoena carries with it an implied undertaking to use the documents or information contained in them only for a purpose directly connected with the litigation: Harman v Secretary of State for the Home Department [1983] 1 AC 280. In any event, concerns about confidentiality do not provide a basis to set aside a subpoena.

Oppressiveness

31. I infer that there was no difficulty in Telstra complying with the subpoena since it has done so.

Conclusion

32. For the reasons set out above, the defendant has failed to persuade me to set aside the subpoena.

Access

33. As the subpoena has already been answered, orders for access can be made. The parties have substantially agreed on the access orders to be made. The conditions in (3)(a) - (d) of the orders (set out below) are agreed. The parties stipulated that the confidentiality undertaking should be in the form (with any necessary modifications) previously given in these proceedings by Mr Nick Klein of Klein & Co. Computer Forensics Pty Ltd. I do not consider it appropriate to include this stipulation in the orders which I will make since it is properly a matter to be addressed by the legal representatives. The condition in (3)(e) reflects that proposed by the plaintiff and appears to me to be sufficient to protect the defendant’s interests.

Orders

34. I make the following orders:

1. Dismiss the defendant’s notice of motion filed on 14 April 2016.

2. Subject to an application for a different order being made in writing to my Associate within seven days, order the defendant to pay the plaintiff’s costs of the motion.

3. Grant access to both parties to the material produced by Telstra Corporation Limited in answer to the subpoena filed 2 March 2016 (the Subpoenaed Material) on the following conditions:

1. The defendant is granted first access to the Subpoenaed Material for a period of 4 business days following the making of these orders.

2. The defendant may arrange for the Subpoenaed Material to be uplifted and copied by an “Approved firm” in accordance with the provisions of Practice Note SC Gen 3.

3. After 4 business days following the making of these orders (or earlier if the defendant’s solicitors notify the plaintiff’s solicitors that they do not object to earlier access), and unless further order is made by the Court, the plaintiff may inspect the Subpoenaed Material and may arrange for that material to be uplifted and copied by an “Approved firm” in accordance with the provisions of Practice Note SC Gen 3.

4. Access to the Subpoenaed Material is limited to the plaintiff’s Australian lawyers (namely the plaintiff’s Australian counsel briefed in these proceedings and the plaintiff’s Australian solicitors retained in these proceedings and working in the Sydney office of K & L Gates, but not to the plaintiff itself or to any of its officers, employees, agents or other advisers) and any suitably-qualified expert retained by the plaintiff’s Australian lawyers who has given a confidentiality undertaking.

5. For the avoidance of doubt, the plaintiff’s Australian lawyers may provide a copy of any expert report they obtain to the plaintiff in order to obtain instructions, including any extract or summary of the Subpoenaed Material contained in the report to the extent that it is relevant to the proceedings.

4. Grant liberty to apply on 3 days’ notice to restore the matter before me, including for the determination of any issues arising from order (3) above.

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Decision last updated: 12 May 2016